HBA-JRA H.B. 1761 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1761
By: Hill
Ways & Means
4/8/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, it is not clear how to treat debt under Chapter 271 (Purchasing
and Contracting Authority of Municipalities, Counties, and Certain Other
Local Governments), Local Government Code, for purposes of the effective
tax rate computation, when the debt is issued by dual-authority taxing
entities like school and college districts, because of the definition of
"debt" in the Tax Code.  Some schools treat the debt payments as operating
expenses while others treat the payments as debt.  This means that some
schools treat debt against the maintenance tax differently from debt
against the interest and sinking fund tax for purposes of the effective tax
rate computation. 

The purpose of H.B. 1761 is to ensure that the effective tax rate is
computed consistently.  H.B. 1761 provides that a contract that has a term
longer than one year and as to which the governing body has obligated ad
valorem taxes for payment of the contract is considered debt for purposes
of computing the effective tax rate. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 271.005, Local Government Code, by adding
Subsection (e), as follows: 

(e)  Provides that a contract that has a term longer than one year and as
to which the governing body has obligated ad valorem taxes for payment of
the contract is considered debt for purposes of Section 26.012(7), Tax
Code, which defines "debt." 

SECTION 2.Emergency clause.
  Effective date: upon passage.